Further to the application of international reference pricing in April, prices of reimbursed prescription drugs covered by patent protection have fallen by 3.5% year on year in the Netherlands.
IHS Life Sciences perspective | |
Significance | International reference pricing (IRP) calculated in April has reduced prices of reimbursed prescription drugs by 3.5% year on year in the Netherlands. |
Implications | Drug prices falling in April was mainly caused by reductions for Janssen's Invega (paliperidone) and Risperdal (risperidone) as well as Boehringer Ingelheim's Viramune (nevirapine). |
Outlook | A mixture of IRP and insurers' preference policy has resulted in significant cost containment over the last seven years. However, IRP appears to play the greater role in keeping a tight control on prices increase. |
The application of international reference pricing (IRP) to reimbursed prescription drugs covered by patents in April has lead to a reduction in prices by 3.5% compared to April 2013, reports the Dutch Foundation for Pharmaceutical Statistics. In addition, prices on 1 April this year were lower by an average of 0.4% compared to March.
According to the Drug Price Act (WGP), IRP in the Netherlands is applied twice a year – in April and October – to ensure that the maximum pharmacy purchase price (wholesale price) of an active pharmaceutical ingredient (API) in the Dutch drug list does not exceed the average price of the same drug in four reference countries, namely Belgium, Germany, France, and United Kingdom. In particular, price reductions for antipsychotic drugs Invega (paliperidone; Janssen, subsidiary of Johnson & Johnson, US) and Risperdal (risperidone; Janssen), and for HIV-1 treatment Viramune (nevirapine; Boehringer Ingelheim, Germany) have played a major role in reducing the average maximum wholesale price in April.
Compared to April 2007, the average price of medicines is 33.9% lower. The decrease has been mainly driven by the WGP, making a greater impact on price reductions than the preference policy whereby the insurer reimburses exclusively the cheapest available version of a medicine, and discard all others. Currently 72% of the cost of prescription drugs in community pharmacies is under the influence of the WGP. For more than half of these drugs a difference between their wholesale price and the average maximum wholesale price in the reference countries of less than 1% has been reported. Furthermore, for half of the medicinal products the average maximum IRP price calculated in April 2013 is higher compared to the maximum IRP price estimated in October 2013.
Outlook and implications
The prices of prescription drugs have been steadily declining in the Netherlands since 2007 through the application of a number of measures to contain prices. In particular, a combination of IRP in force in the country since 1996 and the preferential policy implemented in 2007 have paved the way for significant reductions in drug prices over the last seven years. However, according to the Dutch Foundation for Pharmaceutical Statistics, two-thirds of the 3.5% price decline reported in April 2014 compared to April 2013 appears to be attributable to IRP rather than the preferential policy.
This trend was also confirmed in 2013, when the application of IRP in the second half of 2013 resulted in a price reduction by an average of 2.4% y/y (see Netherlands: 7 October 2013: Drugs prices fall by 2.4 % y/y in Netherlands under IRP system).
Price reductions reported for reimbursed drugs are likely to have had a major impact on expenditure curtailment trends observed in the Netherlands in recent years. In particular, pharmaceutical expenditure in 2013 was down 16% compared to 2008 (see Netherlands: 16 December 2013: Dutch drug expenditure declines 16% during past five years). IRP has a major impact on originator drugs manufacturers as its application equalises prices of innovative drugs to levels approved in the four reference countries.